CHENNAI: Amid criticism over high-cost power procurement, Electricity Minister CTR Nirmal Kumar on Tuesday defended the state’s decision to purchase electricity at higher rates, saying that the temporary arrangement is necessary to prevent power cuts and ensure uninterrupted supply during the festival season. To reduce dependence on expensive emergency purchases, he said, the government is planning to float tenders for long-term power purchase agreements this month.
Addressing a press conference at the secretariat, the minister said tenders have been invited for procuring around 3,500 MW of electricity between October 15 and 31 to meet the rising demand. However, the state is planning to purchase only around 1,500 MW at an estimated rate of Rs 35 per unit, depending on the rates quoted and its actual requirements. The procurement is estimated to increase the expenditure by around Rs 5 crore a day, and the power would be used primarily to meet peak-hour demand between 6 pm and midnight, he said.
Purchasing naphtha-based power was not viable as the rates quoted were as high as Rs 47 per unit, Nirmal Kumar said, adding that the government was prioritising cheaper sources wherever possible. Explaining the demand situation, he said the state’s peak power demand had increased from around 16,800 MW during the corresponding period last year to nearly 21,700 MW now, creating an additional requirement of 4,000 MW to 5,000 MW.
He further said that the government has been exploring all possible sources to procure electricity at lower rates. Arrangements had already been made to procure around 430 MW from Assam. Discussions were also held with Kerala on supplying solar power during the day in exchange for electricity at night. However, the proposal could not be implemented due to practical difficulties, he added.
On long-term plans, initially, the state is considering procuring 4,000 MW to 5,000 MW, though the final quantity is yet to be decided. Tenders are also expected for 1,500 MW to 2,000 MW under five-year contracts. The state is further planning to procure an additional 6,000 MW to 8,000 MW by 2028-29 to ensure adequate power availability, he said.
Criticising the centre’s power allocation arrangements, the minister said Tamil Nadu has been receiving around 1,800 MW less than its expected allocation from central generating stations, including Neyveli Lignite Corporation. Against the anticipated 3,500 MW from wind energy, actual generation currently stands around 500 MW, further aggravating the shortage, he pointed out.
The government has also been reviewing solar power procurement procedures following alleged losses of around Rs 1,000 crore under the earlier system. New applications have been suspended for four months pending the formulation of battery energy storage policies. Online monitoring and technical verification systems are being developed to improve transparency, he added.
